Ask Emily: Insured? Watch out for out-of-pocket costs

Ask Emily is a biweekly column by Emily Bazar of the CHCF Center for Health Reporting, answering questions about the Affordable Care Act. Read her columns at sacbee.com/ask-emily.

Millions of Americans will continue receiving tax credits to help pay for their health insurance, thanks to the recent U.S. Supreme Court ruling on Obamacare. But the ruling doesn’t address affordability, and that means millions of Americans will continue their struggle to pay for health insurance costs.

As I said in my previous column, even some people who receive tax credits have trouble paying their monthly premiums.

In today’s column, I address the price you pay for health insurance beyond your premiums: deductibles and out-of-pocket expenses.

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“People may be struggling to pay the premiums, but they could also face much higher costs when they access care,” says Laurel Lucia, an Affordable Care Act expert at UC Berkeley’s Center for Labor Research and Education.

Consider this: A 40-year-old who earns $30,000 a year and buys his plan from Covered California could spend 28 percent of his income on premiums and cost-sharing before reaching his out-of-pocket maximum, she says.

Admittedly, that’s a worst-case scenario and it’s rare for people to hit their out-of-pocket maximums. But if they do, Lucia says, “most people at that income level would not be able to afford those costs.”

Q: I pay a monthly premium but still have a huge deductible and out-of-pocket amounts. Should I just forgo the insurance and pay the Obamacare tax penalty?

A: I wouldn’t advise anyone to be uninsured. The financial stakes are too high.

But as Melody Lewis, 60, rightly notes, the financial stakes can be high even with coverage. Lewis has a silver-level plan from Covered California, the state health insurance exchange. It has a $2,000 medical deductible and $6,250 out-of-pocket maximum.

A deductible is the amount you owe for covered health care services before your insurance starts to pay. An out-of-pocket maximum is the most you would pay during the term of your health policy – usually one year – before your insurance begins paying 100 percent of covered services.

The Hemet resident has degenerative disc disease in her neck and has shelled out more than $4,000 for treatment this year that isn’t covered by her insurance and therefore isn’t counted toward her deductible.

“It basically turns out to be catastrophic insurance,” says Lewis, who retired to care for her husband and is on a fixed income.

A recent Kaiser Family Foundation survey of 4,555 Californians found that 65 percent of California residents who are newly insured since Jan. 1, 2014, say they’re not confident they can afford major medical costs.

Once again, these are people with insurance.

This problem isn’t unique to Covered California, but the agency says it is making some changes next year to reduce out-of-pocket costs, such as capping the amount consumers have to pay each month for specialty drugs.

It also will offer bronze plan holders lab work, some outpatient services and three office visits – including visits to specialists – that are not subject to the deductible, says spokesman James Scullary. For silver plan holders, medical imaging such as MRIs will no longer be subject to the deductible, he says.

In that way, out-of-pocket affordability is often a “bronze” problem. The Urban Institute found that among insured adults, those with higher deductibles have more problems paying medical bills.

Philip Baron, 54, of Northridge purchased a bronze health savings account plan through Covered California for his family of four.

Based on the plan summary, he thought the deductible was $4,500 per individual, up to a family total of $9,000. But when his wife was treated for a kidney stone last year, he was shocked to learn insurance wouldn’t start paying for her until the entire $9,000 family deductible was met.

“It is so confusing,” he says. “I don’t know how any consumer can possibly understand that.”

Starting next year, Covered California says individuals in families with bronze HSA plans will only be responsible for meeting the individual amount for the deductible and out-of-pocket maximum, not the entire family amount, before their benefits kick in.

Lesson: Know your plan and don’t judge on price alone.

If you’re healthy and don’t usually need much medical care, perhaps a low-premium, high-deductible bronze plan is right for you. But be prepared: You may need to shell out thousands of dollars if you’re in an accident or get sick.

If you’re already battling an illness or take several medications, consider spending more on your premium in exchange for lower out-of-pocket costs.

“In hindsight, maybe I should have selected one of those gold or platinum plans,” Baron says. “We would have saved a lot more money.”

For those struggling to pay your share of the medical bill, even if insured, check with your provider to see if you qualify for a discount. For instance, most hospitals have financial assistance policies based on income.

Some organizations also offer grants to people struggling with bills. One, called the HealthWell Foundation, helps people with certain diseases – including hepatitis C and melanoma – pay for some out-of-pocket expenses.

Since it started in 2004, it has awarded grants to about 200,000 people, including nearly 11,000 Californians. There are strict eligibility guidelines, including income limits. Find out more at healthwellfoundation.org.

Finally, we’ll know more about next year’s affordability picture soon. Covered California plans to unveil its 2016 health plan premiums by early August.